'Unnecessarily restrictive' limit removed from Fidante fund
Fidante has made a number of enhancements to its ActiveX Ardea Real Outcome Bond fund including the removal of a 25% limit on global bonds.
In a statement to the Australian Securities Exchange (ASX), Fidante said the changes would enable the fund, managed by fixed income specialist Ardea, to remain “current and able to deliver stable, risk-controlled returns”.
It had removed the 25% limit on global bond exposure as it felt it was restrictive for the firm’s mandate.
“The 25% cap on physical offshore global bonds is removed to allow Ardea more opportunity to implement its relative value strategy,” it said.
“The 25% limit on physical bonds is considered unnecessarily restrictive considering the global nature of the fund and that it already has the ability to take exposures to global rates above the 25% limit through derivatives.
“Due to the fund’s investment universe being restricted to high quality government bonds and the fund aiming to hedge all foreign currency exposure, this change does not alter the fund’s risk profile.”
Other changes, which would take effect from on or around 21 June, 2021, included the permission for the fund to invest proceeds from repurchase agreements into cash as well as bonds, maintain inflation-linked bond exposure at two years and allow it to maintain duration at -5 years and +5 years (instead of -2 years and +5 years).
“Using conventional duration metrics, the fund’s duration will generally be maintained between -5 years and +5 years,” it said.
“Short-term fluctuations that may occur in the interest rate derivatives trade may cause the fund to move outside of these ranges and will be addressed by Ardea as soon as reasonably practicable.
“This change reflects that Ardea’s risk-adjusted approach to managing interest rate risk (duration) because of their belief that the conventional metric can be an inadequate measure of interest rate risk for relative value portfolios.”
According to FE Analytics, the ActiveX Ardea Real Outcome Bond fund had returned 4% versus returns of 4.4% by the fixed interest-inflation linked bond sector, within the Australian Core Strategies universe, over one year to 31 May, 2021.
Performance of ActiveX Ardea Real Outcome Bond fund versus sector over one year to 31 May 2021
AUTHOR
Laura Dew
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